The national government announced on Monday that it will borrow at least $500 million by selling US dollar bonds with tenors of 5.5 years, 10.5 years and 25 years, marking the second dollar-denominated bond offering under the Marcos Jr. administration.
The Philippines returned to the international market through its multi-tranche dollar-denominated bond offering that was assigned a “senior unsecured” Baa2 rating by international credit watcher Moody’s Investor Service.
Moody’s said the latest dollar bonds issued by the Philippines will be ranked “pari passu” with the country’s “current and future senior unsecured external debt obligations.”
Moody’s added that the Baa2 issuer rating for the Philippines takes into consideration the country’s “high potential” growth and a “moderate” government burden as compared to that of its peers.
The credit watcher added that the Philippines also has a “strong” external position “to meet forthcoming cross-border payment obligations and weather capital flow volatility.”
“Structural credit challenges include low per capita income and some constraints to the quality of institutions, which stand in contrast to strong policy effectiveness,” Moody’s said.
“The Philippines also has a heightened susceptibility to environmental risks given the high incidence of climate-related shocks,” it added.
The latest dollar bond offering by the national government is registered with the United States Securities and Exchange Commission.
Proceeds from the 5.5-year and 10.5-year bonds would be used for “general budget financing.” Ditto for the amount raised via the sale of 25-year “green” bonds, aside from bankrolling or refinancing “assets in line with the country’s sustainable finance framework.”
The Philippines’s dollar bonds offer would settle this month and would have an initial price guidance of T+155 basis points (bps) area for the 5.5-year bond, T+195 bps for the 10-year tenure, and 5.95 percent area for the 25-year sustainability or green bond.
The joint bookrunners for the dollar bond offering are BofA Securities, Goldman Sachs, HSBC (B&D), Deutsche Bank, Morgan Stanley, Standard Chartered Bank and UBS.
In October last year, the Philippines successfully raised $2 billion from its US dollar bond offering. It was the country’s second US dollar bond offering and the first for the Marcos Jr. administration. (Related story: https://businessmirror.com.ph/2022/10/07/phl-raises-2b-from-latest-global-bonds-issue/)
“The success of this transaction is an indication of the Philippines’s readiness to brave choppy waters in pursuit of excellent results,” National Treasurer Rosalia de Leon said in a statement in October 2022.
“Just as we were able to deftly capture a good execution window amid a daunting volatile market environment to attain our financing objectives at favorable cost, we too shall rise above the present difficulties through our eight-point economic blueprint toward differentiating ourselves as the prime destination of choice among quality-conscious investors,” she added.
For the whole year, the national government plans to borrow P2.207 trillion with a 75:25 mix in favor of domestic sources.